GAIL will buy the entire produce for the next 15 years from Essar Oil’s coal bed methane (CBM) block of Raniganj East in West Bengal.
The state-run gas firm outbid three rivals to win the rights to buy up to 2.3 million metric standard cubic metres per day of CBM from Essar at a crudelinked price which works out to $6.492 per million metric British thermal unit on gross calorific value basis at an oil price of $60 per barrel, according to the auction details available on Essar’s website. GAIL confirmed it had won the auction.
The prices are to be revised every month and are linked to trailing three-month average price of crude oil. The price discovered in Essar’s auction is similar to what Reliance Industries received in its CBM auction last year.
At $60 a barrel of crude, other bids translated into a price of $6.382 per unit from Matrix Fertilizers and Chemicals, $8.582 from Graphite India and $5.215 from Positron Energy. Supply of gas to GAIL will begin soon, according to sources.